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France 'on the brink of financial meltdown' as 'rich to flee country over 90 percent tax'


France is on the verge of a “financial crisis” and consequent economic decline after the surprise success of a hard left coalition in this weekend’s elections, the country’s outgoing finance minister Bruno Le Maire has warned.

Speaking on the political situation, UK-based banking expert Bob Lyddon has told Express.co.uk the result signals an end to Emmanuel Macron’s policy of “controlling debt and public spending”, warning the inevitable “deadlock” is no better than a victory for Marine Le Pen’s far-right National Rally.

In a possible hint at future chaos, riot police clashed with left-wing demonstrators in Paris on Sunday evening.

The hastily assembled Popular Front (NFP) – spearheaded by left-wingers including former Presidential candidate Jean-Luc Melenchon – is pledging to increase public spending by £125 billion if they successfully form a government.

They have also proposed a 90 percent tax on incomes over £340,000 a year – but Mr Le Maire suggests such a move could cost more than £250 billion with France already saddled with a budget defunct of 5.5 percent.

The Finance Minister explained: “The most immediate risk is a financial crisis and France’s economic decline.

“The application of the New Popular Front’s disruptive programme would destroy the results of the policies that we have pursued for seven years…

“This project is exorbitant, ineffective and dated. Its legitimacy is weak and circumstantial. It must not be applied.”

Even before the elections, some financial analysts said there had been a big surge in wealthy French citizens considering a move to Italy, Switzerland, and Spain. If the New Popular Front does succeed in implementing a 90 percent tax, interest is likely to increase.

Mr Lyddon, who is the founder of London-based Lyddon Consulting Services, commented: “France has created a deadlock for itself, to add to the deadlock that is likely to emerge in the European Parliament.

“I would defy anyone to predict where the pieces will now fall in France, but the Macron direction of controlling debt and public spending, and increasing the retirement age, looks unlikely to continue when both other main parties want more spending.

“Deadlock is no better than the turmoil which might have resulted from a victory for Marine Le Pen.

“France’s debts are estimated at over 110 percent of its economy (GDP) and that does not include its liability for repaying the EU’s debts under its €750 billion Coronavirus Recovery Fund, or for its guarantee of €87 billion for the euro bailout scheme the European Financial Stability Facility.”

As for the NFP’s prospects, he stressed: “I cannot see how they would get a majority in the parliament to support the measures that would trigger that.

“More likely it all goes round in circles and nothing gets done.”

Others in France are equally concerned by the Prospect of an NFP government, with Jean-Eudes du Mesnil, of the CPME small and medium businesses union, saying: “We’ll see whether they’re applied or not, but there are certain measures that are simply unthinkable.”

Gabriel Attal, whose offer to resign was yesterday refused by Mr Macron with the Paris Olympics just weeks away, later tweeted: “We will always refuse to submit to extremes.

“We will always seek to appease those who want tempers to flare up and play into the hands of populists, polemicists and communitarians.”

He added: “We will always seek to rise to the height of the expectations of the French.

“We will always remain true to our values. ”

“We are ready to rebuild everything. Because we are France and nothing can resist the French people.”

No party is even close to commanding a majority in France’s National Assembly, with NFP winning 182 seats, Mr Macron’s centrist Ensemble alliance winning 163 seats, and National Rally winning 143.

Mr Macron will remain President no matter what – but could be facing two years as a lame duck.

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